One of the Reasons Primary Credit Exists Is To

question 7

Multiple Choice

One of the reasons primary credit exists is to:

• A)Bail out banks which are in financial trouble
• B)Provide additional reserves when the open market staff's forecasts are off
• C)Provide banks with an available source for unsecured lending
• D)Provide banks with a low interest source for long-term capital

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Definitions:

Economic Profit

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, indicating the firm's overall financial gain.

Excess Capacity

A situation where a company or economy can produce more goods than are being demanded, indicating underused resources.

Average Total Cost

Average total cost is the total cost of production divided by the total quantity produced, representing the cost per unit of output.

Economic Profits

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, indicating surplus beyond the normal profit level.